16 bit is not practical for music production (don't get me wrong, IT IS fine for simple playback purposes). Even with a perfect full scale recording, the result won't be much more than ~12bit, and I don't even talk about processing (EQs, comps, etc). Add a half dozen processors and you're kissing 8 bit.
In case you're into lofi production geekyness, forget what I just said and have fun with all the quantization distortion and aliasing. But in case you're looking for at least basic quality (I mean the ability to record a signal half assed hi-fi quality), you'll find no way around a proper audio interface (we're talking about 50$, no the world).
Xabiton, the rule of thumb is that you lose a bit of information for every unused 6dB. So, a 16 bit recording done with a maximum level of -12dB effectively mean you're recording a 14bit signal. Do the same at -24dB and you have only 12bit left. Of course, reality is much more cruel, you can expect to end up with 1 or 2 less bits due to other technical issues.
It is simply impossible to record full 16 bits with 16bit converters. You MUST record at a higher precision to achieve full 16bit quality. That's also the reason why ALL professional AD converters since the last 20 years have at least 18 or 20 bits of resolution.
I'm surprised this is news for you.