Down Payment "Gift"?

[Sequoia Austin]

I need some help understanding home buying finances.
A close family friend and I want to begin RE investing together. She has the cash and I have the ability to house hack and take out a loan. I was hoping to use her cash as a down payment and I would get an FHA loan and live in the property. We would then sign an agreement on the split of cashflow and equity, as I've read most partnerships are handled.

I recently learned that I would be unable to use her money for the down payment unless it was a “gift” to me (without expectation of getting the $$ back) if it were to go toward a down payment on a house. I was a bit confused because I thought this was a regular practice for creative RE financing!

What am I missing? How can we utilize our partnership to finance a home!?

Thanks in advance!