If a lump sum was withdrawn from an IRA and used for a primary residence, do I still have to to pay the 10% penalty?

[DoninGA]

It depends. 

If the IRA distribution was used for the primary residence you already own then the 10% early distribution penalty would apply if you are under the age of 59 1/2.

If the IRA distribution was used for a first-time home purchase then the 10% early distribution penalty would not apply on the first $10,000 withdrawn.

[Opus 17]

If you withdraw money from an IRA for a "first time" home purchase, you can be exempt from the 10% penalty on up to $10,000.  If you withdrew more than that, you will pay the penalty on the rest, and the entire withdrawal is subject to regular income tax.  

For this exemption, a "first time" home buyer means you did not own or co-own the main home where you lived at any time in the 2 years prior to closing on the current home where you want to claim the exception.  You could own a different home if you didn't live there, but you can't have owned or co-owned any share of the home you lived in.

Also, to claim the exception, you must have withdrawn the money no more than 120 before closing on the new home.  If you withdrew the money more than 120 before the closing, or if you withdrew the money after the closing, you can't claim the exception to the penalty.