I know in SR3 when a mage initiates they gain a point of magic but in SR4 it seems to read as though initiating raises the max level of the magic attribute which then needs to be bought with even more karma. Is this correct cause mages are kinda karma vacuums as is and this seems prohibitive?

You are correct. In SR4, Initiating only increases your Max Magic rating and gives you either a Metamagic or (if you run with one of the variant rules in Street Magic) a Power Point worth of Adept powers. You must still pay New Magic Rating x3 Karma to increase your actual Magic rating.