I just need to know if I can run a 2.5" Teraflex Lift Kit with 20" rims and 35" tires or do I have to go to a 3" Teraflex Lift Kit?

 

Have you already purchased those wheels? It's a lot more common to run a 17" wheel vs. a 20". For some reason the dealers like to throw 20" on there, but I'd much rather have more rubber on the sidewall of the tire.

In general yes, you can run a 35" tire (regardless of rim size, preferably with 4.5" backspacing or else you need a spacer) on a 2.5" lift.